BERLIN, Feb. 22 (Xinhua) -- German business confidence fell sharply to the lowest level since December 2014, the Ifo Institute for Economic Research (Ifo) announced on Friday.
The latest Ifo Business Climate Index declined for the sixth time in a row, down to 98.5 from 99.3 in the previous month. "The worries in the German management floors continue to increase," said Ifo President Clemens Fuest, adding "the German economy remains weak."
Around 9,000 companies rated their current business situation "somewhat less favorably." Similarly, the prospects for the coming six months also worsened. According to Ifo, the results and other economic indicators would point to a growth rate of only 0.2 percent in the first quarter of 2019.
Also on Friday, Germany's government-owned development bank KfW halved its economic forecast for 2019. "The mood continues to fall; it is completely understandable. The U.S. threat of punitive duties on our most important export product - cars - is more concrete than ever," said KfW chief economist Joerg Zeuner.
In the Ifo index, German companies in the manufacturing sector "notably" downgraded their assessment of the current situation. However, a clear majority continued to report a solid business situation while "pessimism is spreading more and more among expectations".
Expectations of the construction industry as well as the German service sector also deteriorated. Only a few companies are still expecting a business to improve over the next months.
Only the trading sector recorded a slight increase of the index, mainly because of "less pessimistic business expectations". While the business climate for small retailers improved, the Ifo index for wholesale in Germany decreased.
Recently, the German government lowered its official national gross domestic product (GDP) growth forecast to 1 percent for 2019. In 2018 GDP forecast, the German government had projected a growth rate of 1.8 percent for 2019.
"Business climate still does not send out a signal of recession," said Alexander Krueger, chief economist of Bankhaus Lampe, but warned that "the downturn will continue to take hold."
